Unlike approaching a bank, the proof of creditworthiness is in the analytics when it comes to seeking a loan through Aprenita.
The New York-based lender introduced a platform Tuesday that assesses small businesses, specifically mobile app developers, by the traction their apps have accrued to determine if they are fit for a loan.
That flies in the face of conventional lending wisdom, which says that credit history should typically be used for such purposes. Aprenita co-founder Mark Loranger says the market for small business lending has shifted in recent years from banks to direct lenders such as OnDeck Capital and Lending Club, but the means for vetting loans remains much the same. “Most of them are looking at the individual borrower,” he says, “so they’re looking at FICO scores.”
That means a lender may require personal guarantees from the founders of startups—even though the financing is intended for a business. The problem is a fledgling company might not have the three to five years of audited, operating financials that lenders typically want to see.
Further, chances are a startup did not follow the same business model as a brick and mortar business, and could have multiple founders with very different personal credit histories, which may complicate the assessment even more.
Aprenita thinks it can help mobile developers get the financing they need, Loranger says. His company offers loans from $5,000 to $1 million, with the funding coming from Aprenita’s co-founders and a network of their high-net worth friends and family, he says.
This loan service is not for app developers who just launched though. Their apps must have analytics, from sources such as Flurry, Localytics, Mixpanel, and Appfigures, that can be reviewed. Developers must also show they have revenue coming in from their apps, Loranger says.
On the other hand, Aprenita is not chasing developers whose apps already have mainstream traction and have scaled up along the lines of Snapchat, Tinder, or Angry Birds. “Those aren’t our customers,” Loranger says.
The typical target clientele might generate several thousand dollars to $750,000 in sustained revenue, he says, and wants to grow their top line through user acquisition—without giving away a chunk of the company in equity.
Aprenita was co-founded at the beginning of 2015 by Loranger, who was the chief operating officer of New York-based Updater, and CEO Sergei Kovalenko, who previously co-founded IT service provider iTechArt. After being investors in some mobile app companies, Loranger and Kovalenko were approached by founders who needed to borrow a bit of money—say $20,000 to $30,000—for growth purposes and expected to pay it back in six months. “These founders didn’t want to raise another equity round because in a lot of cases they were break-even or profitable,” Loranger says.
With a clear payback plan in hand, a loan seemed a better option, he says. After doling out such short-term financing several times, Loranger says a business opportunity emerged. Aprenita started a beta last August, and is now open to a broader audience. Companies seeking loans through Aprenita must be U.S.-based.
This algorithmic lending platform could disrupt traditional credit models for evaluating companies, Loranger says. It all comes down to trusting data that he says proves the app developers will pay the loan back. “We didn’t launch this business to take equity risks,” he says. “We are a lender.”
